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Econintersect: Bloomberg reports that there remains an emergency lending program of the U.S. Federal Reserve Bank to other central banks which remains secretive. Bloomberg says that the secrecy involves such a complex web that the names of the borrowers may actually not be known to the Fed itself. The plan, involving currency-swap activities, was in operation from 2007 to 2010 during the global financial crisis has now been revived to deal with the current European debt crisis. In the former iteration of the plan there was as much as $586 billion outstanding from the Fed, the peak amount used in December 2008.

Follow up:

From Bloomberg:

While the transactions with other central banks are all disclosed, the Fed doesn’t track where the dollars ultimately end up, and European officials don’t share borrowers’ identities outside the continent.

The lack of openness may leave the U.S. government and public in the dark on the beneficiaries and potential risks from one of the Fed’s largest crisis-loan programs. The European Central Bank’s three-month dollar lending through the swap lines surged last week to $50.7 billion from $400 million after the Nov. 30 announcement that the Fed, in concert with the ECB and four other central banks, lowered the interest rate by a half percentage point.

While $50.7 billion is far less than the prior peak of $586 billion, the lack of visibility to where and how the money is being used has been criticized. Rep. Stanley Neugebauer (R, TX), chairman of the House Financial Services Subcommittee on Oversight and Investigations, has proposed that an investigation is needed because, he says, “Increased transparency is warranted here.”

The activity here is different than a number of other Fed activities that have been in the news that have had the label “secret” attached. The GAO revealed in July that a total more than $16 trillion had been lent to the banks by the Fed during the financial crisis. That was the headline (GEI News) but behind the blast was a little very pertinent factoid: $16 trillion was the total of a myriad of transactions that never involved more than about $1 trillion at any time and was often lower.

GEI News reported a Bloomberg analysis in August that concluded the maximum ever in use by the Fed at one time was $1.2 trillion.

Finally, yesterday a detailed analysis and commentary by Prof. James D. Hamilton, University of California, San Diego reviewed the widely quoted $7.7 trillion in secret fed loans that has been floating around the printed and internet media worlds for a year and a half. He found the public records which covered the $7.7 trillion in Fed actions that had transpired as of March 2009 when the misstatements about “$7.7 trillion in secret loans” started. His first conclusion was that the loans were not secret; the records were available for anyone who made a thorough research effort. The second conclusion was similar to others reached concerning later data: The amount outstanding at any one time was in a range under $1 trillion.

What is different with the news today is that the alleged secrecy is guarded by international “financial curtains” and, in this case, future analysis and investigation may not reach the same conclusions that have occurred from records examined within the U.S. by skilled researchers.

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